Tuesday, July 19, 2011

Manchester City's Amazing Deal: Know Your Rights

When Manchester City announced that their commercial agreement with existing shirt sponsor Etihad Airways was to be expanded into a 10-year deal worth up to £400 million, the reaction of most observers in the football world was one of disbelief. This hugely lucrative contract includes the renaming of the City of Manchester Stadium in a naming rights deal that is likely to be the highest ever signed in football.

Indeed, Garry Cook, City’s ebullient chief executive, described it as “one of the most important arrangements in the history of world football”, while the CEO of Etihad Airways, James Hogan, was even more effusive, employing the full range of business buzzwords, “This is a game changing partnership agreement that redefines the traditional sports sponsorship paradigm.”

Of course, many people immediately assumed that one of the principal drivers of this deal was City’s need to boost their revenue in order to cope with the imminent arrival of UEFA’s Financial Fair Play (FFP) regulations that compel clubs to live within their means (if they wish to compete in Europe). This was tacitly confirmed by Cook, when he admitted, “The backdrop, of course, is UEFA’s Financial Fair Play and this deal helps (us) to continue to make significant progress in that area.”

Exactly how much is impossible for external analysts to say, as City have yet to publish the financial aspects of the deal. Initially, most newspapers suggested that it was worth £100-150 million, but now seem to have settled on £300 million, rising to £400 million. The truth is that nobody outside the club really seems to know for sure. Indeed, City released a statement to this effect, “The financial details of the comprehensive agreement announced last week between Manchester City and Etihad Airways remain confidential and figures being speculated about are not accurate.”

"Cooking up a good story"

The lack of certainty over the value of the sponsorship has not prevented prominent figures at other clubs from criticising the deal. The first to express his doubts was Arsenal manager, Arsène Wenger, who has often lambasted the practice of “financial doping” in the past, “It raises a real question about the credibility of the financial fair play. That is what this is all about. They give us the message that they can get around it by doing what they want.”

Liverpool’s new owner, John W. Henry, quickly followed suit, when he claimed that “Mr. Wenger says boldly what everyone thinks.” The Reds’ managing director Ian Ayre was unsurprisingly of the same opinion, questioning the transparency of the arrangement, given the close relationship between the sponsors and City’s owner, “The guys from UEFA said there would be a robust and proper process about related pay transactions.”

Wenger agreed, “It looks to me that Platini is very strongly determined on this. He is not stupid. He knows that some clubs will try to get around that and I believe they are studying behind closed doors, how they can really strongly check it.”

Certainly, UEFA talked tough last year, when Andrea Traverso, their head of club licensing and financial fair play, described what would happen if clubs attempted to beat the system by taking advantage of loopholes, “Should the clubs put in place specific structures that allow them, in ways we didn't think about, to easily get around some of the principles, we could amend these rules to catch up with these situations.”

"Michel Platini: this is how FFP will work"

UEFA President, Michel Platini, ostensibly substantiated the concerns of City supporters that he was targeting their club when he specifically mentioned them last year during the announcement of the new financial measures, “Manchester City can spend £300 million if they want to, but if they are not breaking-even in three years, they cannot play in European competition.”

However, Garry Cook did not appear overly concerned, “We have a very open dialogue with UEFA. We have had several meetings with them and they are very supportive of our plans.”

Indeed, UEFA’s response to City’s mega deal was far more measured than a year ago, “We are aware of the situation and our experts will make assessments of fair value of any sponsorship deals using benchmarks.” So, City are no longer being singled out, at least publicly, with UEFA keen to stress that they will investigate all major sponsorships whatever the club, which “will then be considered by the Club Financial Control Panel, together with any relevant information the clubs present regarding the deals, when they assess the break-even requirements.”

So how will UEFA assess City’s deal?

This is effectively a three-stage process. First, they have to decide whether the deal is a “related party transaction”. If they believe that it is, then they have to estimate the “fair value” of the deal. Finally, if the actual value is higher than the fair value, the difference is deducted from the revenue included in the FFP break-even calculation.

"Every cloud has a Silva lining"

The notion of related party transactions is evidently important to UEFA, as no fewer than three pages of the FFP regulations are dedicated to defining exactly who or what is a related party. The key point here is that “close members of the family” are considered to be related parties, so long as they have “control” or “significant influence” over the club.

In this case, Etihad Airways is owned by the government of Abu Dhabi, whose ruler Sheikh Khalifa bin Zayed Al Nahyan is the half-brother of City’s owner Sheikh Mansour bin Zayed Al Nahyan. It is conceivable that City might be able to demonstrate that no influence exists, but it would appear that there is a prima facie case to answer.

It is not clear whether the fact that the majority of City’s commercial sponsorships come from the Gulf state, including the Abu Dhabi Tourist Authority, Etisalat and Aabar Investments, will have any bearing on UEFA’s ruling, but Cook himself has admitted that it is “clearly evident” that there is a strong Abu Dhabi bias. Anyway, for the purpose of our analysis, let us assume that UEFA do indeed treat this deal as a related party transaction.

In fact, the FFP regulations expressly include “sale of sponsorship rights by a club to a related party” as their first example of “transactions that require a licensee to demonstrate the estimated fair value.” This has also been verbally confirmed by UEFA’s general secretary, Gianni Infantino, who said that such transactions would be compared to similar deals already in place.

"Fast Kompany"

Again, John W. Henry expressed his scepticism, when he asked, “How much was the losing bid?” Wenger also cast doubts on the value of the deal, “If FFP is to have a chance, the sponsorship has to be at the market price. It cannot be doubled, tripled or quadrupled, because that means it is better we don’t do it and leave everybody free.”

However, Garry Cook argued, “There’s real value in that partnership. Financial Fair Play isn’t the driver, commercial growth is the driver.” That obviously makes sense for City, but how about Etihad? The airline’s executives would contend that this deal has already been superb for their profile, as evidenced by last week’s intense media exposure, and will provide them with a more than acceptable return on their investment.

Not only do City compete at the upper levels of the most viewed league in the world, but their global visibility has been dramatically enhanced by their qualification for the Champions League. Indeed, it is quite possible that the airline gets more bang for its buck with City compared to more established clubs, as the exposure is higher with such a project. Big money deals may be old hat at clubs like Manchester United or Real Madrid, but it’s a relatively new phenomenon at Eastlands, sorry, the Etihad Stadium.

"Nigel de Jong - Dutch courage"

Some have questioned how it could make sense for a loss-making company like Etihad Airways to splash out such a large sum in sponsorships, but that ignores the fact that this investment is all about “building the brand” in the same way as Emirates have done in the past.

At this stage, it’s worth pointing out that the FFP regulations refer to “fair value”, as opposed to the “market value” that is incorrectly used by much of the media. The difference can be seen by an analogy in the housing market. If you decide to sell your house and 99 people offer you £250,000, that would be considered fair value, but if one enormously wealthy individual likes it so much that he bids £500,000, that is the market value.

This is an important distinction, as market value would be easy to prove. Sports lawyer Andrew Nixon of Thomas Eggar LLP asserted, “Competition law challenges rarely succeed on sponsorship deals. There is a vast number of football teams and leagues airlines can sponsor and there are many viable market alternatives.”

Importantly, even if UEFA rules that City’s deal is above fair value, it is only the excess that would be deducted from the club’s income for the purposes of the FFP break-even calculation and not the entire agreement. In other words, if the deal is worth £30 million a year and UEFA consider the fair value to be £25 million, only £5 million would be deducted.

"Don't cry for me, Argentina"

UEFA’s difficulties in assessing the fair value of the deal are compounded by the structure of the deal, which covers far more than the stadium naming rights that were initially reported. This is just one element of a broad agreement that also includes an upgrade of the current shirt sponsorship and naming rights for the Etihad Campus, which encompasses a large part of the Sportcity site in East Manchester.

Furthermore, given the long-term nature of the contract, City could argue that they have built in uplifts, as the sponsorship market might be even more lucrative in ten years time. In addition, part of the money is almost certainly based on performance bonuses, e.g. qualifying for the Champions League or winning the Premier League, which might make it more palatable to the powers that be.

As I said earlier, nobody can honestly claim to know the actual revenue split of the deal, but we can make a reasonable working assumption that the shirt sponsorship is worth £20 million a year, the stadium naming rights £10 million and the campus another £10 million. As we assess each element for fair value, it will become clear why these values have been chosen.

An assumed shirt sponsorship value of £20 million would place City right at the top of English deals, generating the same annual revenue as Liverpool and Manchester United. Those clubs might argue that City’s historical performance should not allow them to be at the same level, but the counter-argument would be that nobody complained about Liverpool increasing their sponsorship deal by £12.5 million a season when they replaced Carlsberg with Standard Chartered last season, even though they had not qualified for the Champions League. Similarly, Tottenham managed to increase their sponsorship by nearly 50% from £8.5 million to £12.5 million (via an innovative combination of Autonomy and Investec), based on just one season in the Champions League.

If the net is cast a little wider, Bayern Munich’s sponsorship deal with Deutsche Telekom is worth around £23 million, though performance bonuses could take that above £25 million. That might seem reasonable for a club with Bayern’s tremendous record, but the value of deals at other German clubs is more debatable, particularly Schalke’s money-spinning deal with Gazprom.

Equally, the announcement of Barcelona’s first ever shirt sponsorship deal with the Qatar Foundation, a non-profit organisation, did not attract the same levels of opprobrium as City’s. This has been widely reported as €150 million over five years, but is actually worth up to €170m, as it also includes €5 million trophy bonuses and €15 million for “the concept of commercial rights”. So, it is likely to be worth €34 million a year (or just under £30 million at the current exchange rate).

"The Italian Job"

Others have pointed disapprovingly at the magnitude of the increase in City’s shirt sponsorship, but they have cited a current value of £2.3 million for the Etihad deal, which looks far too low. Deloitte and other reputable sources have said that this deal is worth £25 million over three seasons, so with uplifts, it’s around £7.5 million as we speak. Other commentators have probably confused this with City’s previous deal with Thomas Cook that was worth £2.3 million.

If UEFA genuinely want to investigate the value that companies obtain from sponsorship, it might be pertinent to ask why they don’t also take a look at Emirates, which sponsors many different clubs. Or indeed the ethicality of clubs being sponsored by gambling sites, which is a growing trend in football marketing.

Probably the most contentious aspect of the deal is the stadium naming rights, which is virtually unprecedented in football at its estimated value. There are very few decent benchmarks in the Premier League with the obvious comparative being Arsenal’s deal with Emirates, which was worth £90 million (£100 million less £10 million fees), covering 15 years of stadium naming rights (£42 million) and 8 years of shirt sponsorship (£48 million).

This works out to just £2.8 million a year for the naming rights, which is considerably lower than City’s deal, but it’s not really a fair comparison for many reasons. Not only have sponsorship values in general grown significantly since the agreement was signed, but also this particular deal is very much a special case, as Arsenal compromised on the total value so that the cash payments would be heavily front-loaded to help finance the construction of the stadium. When questioning the merits of City’s deal, Arsène Wenger drily observed, “We must have done a bad deal”, but there’s more than a grain of truth in that assertion with Emirates admitting that they “did well with Arsenal.”

"Get your Yaya's out"

It’s worthwhile looking at Germany for a more considered view on naming rights, as the market there is more than four times as large as in England, according to Sport + Markt’s 2011 Naming Rights report. Many clubs in the Bundesliga have sponsorship deals for their stadiums, including Borussia Dortmund (Signal Iduna), Hamburg (Imtech), Wolfsburg (Volkswagen), Stuttgart (Mercedes-Benz) and Eintracht Frankfurt (Commerzbank).

However, perhaps the best known is Bayern Munich, whose deal with Allianz is worth €90 million over 15 years, producing €6 million (£5 million) a year. On the face of it, this might suggest that City’s £10 million deal is over-valued at double the money, but this is far closer than the difference in overseas TV rights, which are around 14 times higher in the Premier League than the Bundesliga. Obviously, this is not quite the same thing, but it’s food for thought.

Or UEFA might look even further afield to America, where naming rights are a well-established feature of the sporting landscape. Virtually every major sports arena is now named after a sponsor that provides the club with a healthy source of income. The concept is nothing new under the sun either, as Times Square was named after the New York Times way back in 1903.

Although the link between football and American sports like baseball, NFL and NBA may seem rather tenuous, fundamentally the principle is identical and it seems quite pertinent with the influx of foreign owners into English football. Some of the stadium deals signed on the other side of the pond provide an indication of where this market may go in the future, going as high as $30 million a year paid by JP Morgan Chase for Madison Square Garden. Citigroup and Barclays both pay $20 million a season, the former to the New York Mets, the latter to the New Jersey Nets. Farmers Insurance have paid an astonishing $700 million over 30 years to name a stadium in Los Angeles where a team is not even established yet.

This does rather beg the question of how the sponsor benefits from such a deal: what’s in a name? The obvious answer is brand awareness with a raised profile, which is particularly well served if it is a new stadium. This point was seized upon by Ian Ayre, Liverpool’s managing director, who noted, “It hasn’t happened in Europe that a football club has renamed an existing stadium and it’s had real value.” This is correct, but it’s doubtful whether too many fans are attached to the name Eastlands (or even the City of Manchester Stadium). It would be a different story if this had been Maine Road. This is why it would be difficult to sell naming rights for grounds like Anfield or Old Trafford, as whatever name anybody tried to call the stadium, everyone would still use the old/real one.

One valid point about City’s agreement is that other Premier League clubs have to date been unsuccessful in securing large naming rights deals, though paradoxically this announcement could potentially help others make progress in their discussions. Chelsea have been looking to secure a partner for some time with analysts suggesting that £10 million is the objective, while Liverpool would be equally eager if they move to a new stadium, as Ayre confirmed, “We already have a very healthy dialogue in place with several leading brands regarding naming rights.”

"Hart and Soul"

That said, the Sports + Markt report confirmed that the value of stadium naming rights has been steadily rising, up over 60% from €48 million in 2007 to €78 million in 2010 with the total projected to increase to €87 million in 2011.

Given the difficulties inherent in finding solid comparatives for naming rights, it is possible that UEFA might look at this as just another commercial deal. If they did so, they could not help noticing that the bar is being constantly raised in the commercial sphere, e.g. contracts with kit suppliers. Liverpool’s recent £25 million deal with Warrior Sports is more than double the amount that they previously received from Adidas, helped by the relationship that the new owners enjoyed with the company, which already provides kit for the Boston Red Sox.

Similarly, Manchester United are in discussions to extend their deal with Nike for a record £450 million, which would be worth around £35 million a year, a £10 million increase. If you think that’s impressive, the French national team’s deal with Nike is worth €320 million over 7½ years, which works out to about £37 million a year for just a handful of matches.

In short, commercial opportunities in football are big business these days and City’s deal should be assessed in that light. In a strange way, it brings to mind the movie “The Wizard of Oz” and the famous line about not being “in Kansas anymore.”

With the exception of Manchester United (£81 million), English clubs have lagged their continental counterparts when it comes to making money from commercial opportunities, growing fatter on a diet of ever-increasing TV contracts. Not only do the Spanish giants, Real Madrid and Barcelona, earn substantially more at £124 million and £100 million respectively, but German clubs also consistently generate more income. This description does not just refer to Bayern Munich, who earn an astonishing £142 million commercial revenue a year, but also clubs like Schalke, Hamburg and Dortmund.

There’s certainly room for improvement, which is exactly what English clubs are belatedly doing. In 2010/11, Manchester United’s commercial revenue will exceed £100 million, while Liverpool’s £62 million will ultimately be boosted by £25 million growth from the Standard Chartered and Warrior deals. Likewise, Chelsea will increase their revenue by £12 million from £56 million following better deals with Adidas and Samsung.

In other words, it’s become a commercial arms race with each of the leading clubs significantly increasing their commercial revenue in their own way – and City are no exception.

Actually, I tell a lie, as City’s deal includes one unique element, the Etihad Campus, which is perhaps the cleverest and certainly the most innovative part of the agreement. This is a gigantic redevelopment project on 80 acres of land adjacent to the stadium, including a relocated training ground, youth academy, a sports science facility, office space, a call centre and City Square retail outlets. The academy will be seriously impressive, catering for up to 400 young players, with 16 football pitches, a 7,000 capacity stadium for youth matches and on-site accommodation.

"Opportunities (Let's Make Lots of Money)"

Such a development will not only benefit the community, but will bring a raft of sponsorship opportunities. Nothing like this has been done before, so it will be very difficult for UEFA to assess and almost impossible to deem unfair. In fact, this is exactly the type of expenditure that UEFA is trying to encourage with direct youth and community development costs being totally excluded from the FFP break-even calculation. For someone with pockets as deep as Sheikh Mansour, this is effectively “free” money, at least in terms of FFP.

On top of that, Annex X allows any profits from non-football operations to be included in the calculation, so long as the operations are: (a) based at, or in close proximity to, a club’s stadium and training facilities, such as a hotel, restaurant, conference centre, business premises (for rental), health-care centre, other sports teams; and (b) clearly using the name/brand of a club as part of their operations.

That sounds very familiar, so it’s a double whammy for City: the costs for this development are excluded, while the profits from the business located there are included. Not only that, but UEFA should be positively delighted, as it’s very much in the spirit of the stated objectives of FFP. Given those factors, the temptation must be to load up the sponsorship on this part of the agreement, so the deal split might be more like £10 million on shirt sponsorship, £5 million on naming rights and £25 million on the campus. We shall see.

Even with the benefit of this deal, City are still a long way from break-even, having recorded a thumping great loss of £121 million in 2009/10. The deficit is anticipated to be even higher last season, as the impact of the previous summer’s incoming players will have further increased the wage bill and amortisation. Nevertheless, City insist that matters will improve. Garry Cook stated, “Clearly our intention is to comply. FFP is on our conscience. We talk about it at every board meeting and it’s part of our long-term plan.”

Even the spendthrift manager Roberto Mancini now appears to have accepted the new financial realities, “FFP is for everyone”, saying that City would no longer “pay £10 million more than other clubs” for new players. Indeed, so far this summer, City have only signed Gael Clichy from Arsenal for £7 million and Montenegro defender Stefan Savic for a similar amount. That’s chicken feed by the Blues’ recent standards, though there’s still time for them to splash out on another big name.

That said, City are very keen to reduce their bloated wage bill by offloading players that no longer fit into Mancini’s plans, including the likes of Emmanuel Adebayor, Craig Bellamy, Wayne Bridge and Shay Given. From this season, the club’s revenue will also be significantly boosted by a Champions League campaign and, of course, the vast growth in sponsorship deals.

They will also be helped by the UEFA’s so-called “acceptable deviations”, namely the €45 million aggregate losses allowed in the first two-year monitoring period, which means that they don’t have to actually reach break-even from day one, so long as the owner covers the losses, which I think we can safely assume.

If that wasn’t enough, the glide path is made even easier by clubs being allowed to exclude wages from players signed before June 2010, so long as they are reporting an improving trend in their accounts. Granted, that “loophole” only exists for the first two monitoring periods (2013/14 and 2014/15), but it will buy City time to execute their strategic plan.

In essence, that has been to spend big in the short-term on transfers and wages in order to break into the Premier League top four, so that they can qualify for the riches of the Champions League, which is easily worth £30 million additional revenue a season. That extra income will contribute towards balancing the books while the academy can be established, producing top class players in-house, but the growth in commercial revenue is still a vital component to that strategy.

One of UEFA’s main objectives in implementing FFP was to “curb the excessive spending and inflated transfer fees and player salaries that have endangered football in recent years.” To a certain extent, there are some signs that this is happening, but new regulations often have unintended consequences and it appears that clubs are also striving to increase their revenue, as opposed to simply cutting costs.

Even though City’s revenue grew by an impressive 44% in 2009/10 to £125 million, which pushed them up to 11th place in the Deloitte Money League, this is still a long way behind other leading clubs. For example, it’s less than half of local rivals Manchester United (£286 million) and £100 million lower than Arsenal (£224 million). On the continent, both Real Madrid (£359 million) and Barcelona (£326 million) generate £200 million more than City every season.

City could look to increase their match day revenue, which they have partially addressed via a new agreement with the council, whereby the club pays them a fixed amount regardless of the attendance instead of the previous percentage. Any further growth would mean raising ticket prices, increasing the corporate seats or expanding the capacity of the stadium. The first two moves would be unpopular with fans, while the stadium expansion is longer-term in nature.

Plans exist to increase the capacity of the stadium from 47,000 to at least 60,000, but this would not be entirely straightforward, due to its awkward design. There have been some concerns that City would struggle to fill a larger stadium. Although their attendances have always been good (4th highest in the Premier League), they do not regularly achieve full capacity. That said, the crowds have risen since the move to Eastlands and continued success on the pitch should produce a further increase, as was the case with Chelsea after Abramovich’s arrival.

Television has been the big driver of revenue growth at football clubs and the latest Premier League deal for the three years between 2010/11 and 2012/13 helped increase City’s distribution from £50 million to £56 million. However, this is a tide that floats all boats with very little difference between the leading clubs. The real distinguishing factor is the honey pot known as the Champions League, so City’s qualification will have a transformational impact on their revenue, but it’s a one-step growth.

So, with match day and TV relatively fixed, it’s really down to the commercial side, notably sponsorships, to substantially close the gap with the big boys. Even before the blockbuster Etihad deal was announced, City’s revenue from commercial activities had more than doubled in 2009/10, including an increase of almost 400% in revenue from corporate partnerships up from £6.5 million to £32.4 million.

This explosive growth has inevitably raised suspicions, particularly given the provenance of the sponsors, but the criticism of City has taken on something of the nature of a moral crusade with many commentators accusing the nouveaux riches of buying success, after Sheikh Mansour ploughed close to a £1 billion into the club since acquiring them in 2008. There’s little doubt that City have contributed to the inflation in transfer fees and wages, with net transfer spend of £343 million in the last three seasons and a wages to turnover ratio of 107%, though they are hardly alone in that.

However, there are two sides to every story and there are a couple of facets of this deal that should be commended. From the point of view of the fan, it is surely better that a club tries to grow its revenue by taking more money from sponsors than raising ticket prices. This is where Arsenal’s criticisms ring a little hollow after they hiked ticket prices that were already among the highest by 6.5% for next season.

And while I yield to nobody in my admiration for Sir Bobby Charlton, his suggestion that big clubs should not think about renaming their stadium should also be considered alongside Manchester United’s stratospheric ticket price rises. Indeed, City were top of the ING Direct Value League last season, measured by comparing clubs’ season ticket costs with Premier League performance.

City’s commercial deal will also benefit the local community, which is why the council agreed to let City sell the naming rights of a stadium that is not owned by the club, but the council. In fairness, the club had already contributed £30 million to the stadium conversion costs after the Commonwealth Games, but the council’s willingness to let the deal proceed on these terms still came as a surprise to some.

However, the council will receive £20 million over the next five years, and, more importantly, their leader points to “the regeneration of the area, delivering significant community and economic benefits”, including the creation of new jobs. Faced by severe government cuts, the cash-strapped local authority have gratefully accepted City’s proposal for this deprived neighbourhood, describing it as “great news for Manchester, reinforcing our sporting, transport and economic growth.”

Of course, other clubs have also been very active in their community, but this plan is on an altogether different scale. Yes, it might feel a little like wealthy philanthropists establishing charities as a way of reducing their tax bill, but the fact is that the community will still gain.

This has not stopped other clubs from sniping, led by Bayern Munich chief executive Karl-Heinz Rummenigge, who also happens to be chairman of the European Club Association. When commenting on City’s large financial losses, “Kalle” sniffed, “Maybe they know a trick I don’t that will allow them to take part in the Champions League.” This is the same Bayern where two of their most prominent sponsors, Adidas and Audi, each own around 10% of the club.

Similarly, Wolfsburg is a wholly owned subsidiary of Volkswagen Group, who also pay for the club’s stadium naming rights and shirt sponsorship. Little wonder that Stefan Szymanski, professor of sports business at London’s Cass Business School, said, “If there’s a question of fair value in relation to an Abu Dhabi client sponsoring Manchester City, I see no reason why the same questions can’t be raised about corporate Germany sponsoring German football.”

"Gael force"

If UEFA did decide to broaden their investigations into other sharp practices, they could also take a look at the ridiculously unfair advantage enjoyed by Real Madrid and Barcelona with their huge slice of the Spanish TV pie. And while they’re about it, what about those clubs that directly inflate the transfer market by paying over the odds for average players (naming no names)?

My simple point here is that if you look hard enough, you will surely find reasons to investigate activities at numerous clubs, so it would be very harsh for UEFA to zoom in on City. There will be many such deals sailing close to the edge and there must be a better use of UEFA’s time than to review each one. Adopting a basic tenet of the English legal system, a reasonable man will know when a deal is completely ludicrous, e.g. a £200 million annual season ticket, but to my mind City’s deal does not fall into that category.

While UEFA’s credibility over FFP is at stake, there’s every indication that they will help clubs towards break-even, instead of throwing them out of Europe. Otherwise, in City’s case, it would feel like they should re-release The Clash’s seminal “Know Your Rights” with slightly modified lyrics: “You have the right to sponsors’ money, providing of course you don’t mind a little humiliation, investigation, and, if you cross your fingers, authorisation.”

"Sometimes a picture is worth a thousand words"

There may be a whiff of creative accounting around this incredible deal, but there’s also genuine substance and benefit to the community. City’s commercial growth might have been fuelled by money from companies that are at the very least “friendly” towards their owner, but when the deals are broken down the sums are not inordinately high, so are more or less in line with benchmarks.

Furthermore, the proceeds will be invested in a state-of-the-art academy with the objective of producing homegrown young players who will ultimately replace the imported “mercenaries”. It’s a well-considered plan that seems to me to be within both the letter and to a large extent the spirit of FFP.

86 comments:

As always, an excellent article mate! Your articles are absolutely fascinating and wonderfully well thought out and researched.

As a City fan, the criticism from other clubs etc has come to be expected, and while the headline figures bandied about are very large, I think you have shown that they may indeed reasonably close to 'fair value'.

Thanks for taking the time to look at this issue in some depth and for providing a balanced and considered point of view. Manchester City is 'pushing the envelope of the financial model not initiating a corrupt and morally bankrupt strategy. Good luck to them and watch the rest follow closely behind.

Excellent article, one that Wenger and co. would be very well advised to read. Hard facts, figures, logic and reason applied.. a far cry from the bitterness and hypocrisy being spouted everywhere else about this deal. Fantastic work.

From a life-long Blue, a huge thank you for taking the time to produce such a fantastically analysed and balanced piece. I could go into detail about what I enjoyed but the whole article left me with a great sense of satisfaction as well as a huge two fingered salute to all the jealous snipers out there. Once again many thanks.

Fantastically well balanced and informative article yet again,, well done.City I feel are a unique case in World football. On the one hand yes the take-over and the vast sums of wealth splashed out is rather crude, against the 'spirit' of the game (whatever that is nowadays) and merely a vehicle to advertise Abi Dhabi.However, Mansour is a clearly a clever guy and his vast wealth means he can counter those criticisms by investing in youth and the community, setting him apart from other owners who are either in it for a quick buck or the glory of owning a football club. He may still be in it for those things as well (I certainly don't think he is in it for his life-long love of City!), but as long as he is bringing some tangible benefit to the club + the community, opposition fans can't grumble - even if it is through occasionally bitter + jealous gritted teeth!

Very good article. Surely, UEFA will have to scrutinise all deals from commencement of the new FFP rules, so Arsenal et al will be treated the same as City or any other club. The question is - as you allude to - will UEFA be as diligent regarding German and Spanish clubs?

I think there is a little of the cart being before the horse in the spirit of this deal i.e. if you are prescient enough to sponsor a team based on their future sucess then should you not pay a more reasonable amount for what is essentially a gamble?

Great article, really showing that Man City is actually ahead of the other clubs in terms of finance and business.

With a degree in economics, I would expect Arsene Wenger to know a bit more about numbers but his comments are just plain silly.

As one commenter said before, City is an easy target because of the cash they splash. But while Fleet Street thinks nobody has brains at City, deals like this show that they actually have brains and use them more.

A brilliant read - thank you. We should not underestimate the possibility that in ten years, 400 mill might not seem "too much".

The real numbers of this deal will be uncovered in the balances of each year. I don't know much about these things, but I reckon UEFA could ask for having the sponsorship broken down into specifics (shirt; stadium-name etc) in the annual reports?

Fantastic article that gives a totally unbiased view. As a Manchester United fan I will be the first to admit that i criticise City mire than other clubs but on the issue I feel they are totally justified.Maybe Mr Wenger should know exactly what he is talking about before he passes comment in future

UEFA's new rules are simply a case of protectionism masquerading under a banner of fair play. Participation in the so called Champions League roughly doubles a club's income. I noted the Arsenal chairman's comments a few months ago that failure to qualify would constitute financial Armageddon for his club. That says it all. So, to have a rule which states that you can only spend a percentage of your income without being penalised means that the door is effectively being closed on all clubs outside of the Champions League. Can this be legal? I should like to see it challenged in the courts.

Great article! I just spent 10 minutes writing a response then it didnt upload! Argh! In summary:

1. They are breakign rules deliberately, but very cleverly (surely we are not so naive to suggest otherwise)2. As Manour is part of the ruling family that owns all of the Man City sponsors then the related party rule definitely applies and be appropriately deducted, to whatever is fair value.3. I have lived and worked in the UAE (Abu Dhabi and Dubai) for past 3 years. This region is corrupt beyond belief. Nepotism is the number one currency by a mile. I was not surprised by the Qatar allegations and have no doubt they "Bought" the WC.4. This will make a mockery of the FFP rules if it is not adjusted for the purpose of FFP. The fact of the matter is City are using their financial weight, and likelyhood is that UEFA wont do anything about it because in football money seems to be able to buy anything.

You express the view that nepotism is a bad thing yet seemingly fail to realise that the so called Fair Play rule is equally immoral. Clubs will only be able to spend a percentage of their income from football. Guess who have by far the greatest income from football. Oh yes, the clubs who are annually on the Champions League gravy train! So the door to this competition is effectively being closed to all others. Perhaps you'd let us know why nepotism concerns you but protectionism doesn't.

Football at the very top is now a game for the rich and the corrupt - just look at the recent C4 documentary, where club's were bandied about like suggestions on a shopping list, with the fans branded an 'inconvenience'.City are just the latest entrant, with Mansour using his immense wealth to barge their way in and buy their way past the rules.Is there something 'wrong' about that? Yes. But the top of the game is equally morally bankrupt anyway so City look positively saintly in comparison - and at least they seem keen on giving something back.

Another excellent article. As a City fan I think that I should point out that the club are in the process of bringing in more non Abu Dhabi related sponsorship. Existing deals with Thomas Cook and Umbro, have been added to recently, with commercial deals done with the likes of Jaguar, Amstel and EA sports.

So a club can spend obscene amounts of money in buying a vast number of players, then have the owners' half brother throw vast amounts of money at a new sponsorship deal to help comply with rules designed to stop that very same practice. Helped, of course, by a city council all too eager to hand them a cut price stadium.

When brought down to base facts, this is NOT in any way in the spirit of FFP. Clubs who have spent decades building revenue and a fan base can be so easily circumvented by fancy accounting and, frankly, dirty money from dictatorships and criminal run groups.

Regardless of the well written and researched article (as always), this is just another obscenity in a long line of underhand events to bring football closer to meltdown. Chelsea and City get to circumvent 30 years of development by throwing money at the problem.

If this complies with FFP, then they may as well not bother. This type of deal does not bring about financial stability as the only way to compete is to use the same methods used by City and Chelsea.

The fact that this article can show how easy City can comply with FFP should bring dismay to everyone (except City fans, of course).

There seems to be a big deal made about the 'free lunch' that is a sponsorship of a community project such as the Etihad Campus, which is then negated from the accounts for the purpose of FFP.

While any such investment is commendable, I fail to see what 'free lunch' is achieved. Surely, if £300mio of the (supposed) £400mio, is spent on such community projects, then that only leaves £100mio to net against wages and other costs in the eyes of UEFA and the FFP criteria. Any other take on this would be double counting the £300mio.

In the article it was suggested that as much possible of the sponsorship should be allocated towards the Etihad campus. While this will leave the club more able to justify such a huge sponsorship, it makes balancing the books for the club to fulfil the FFP criteria even tougher.

An excellent article which illustrates the problems facing UEFA. When it’s explained like this, it seems perfectly rational but everyone knows this is a complete nonsense as are a number of these ‘sponsorships’ across Europe.

I would encourage anonymous no 2 to join the dots and consider who is ultimately funding this frivolity namely the citizens of those countries and the West who are paying the price of energy dependency on these nations?

Without Jack Walker and Abramovic it would only have been two, your club and Arsenal. In fact Arsenal are now in turmoil and have won nowt for years.

So without the naughty investors you might as man u would have won the Prem 16 out of its 19 times!

Healthy?

Your club secretly instigated the inception of the Premier League back in 91 being the brain child of Greg Dyke, united fan who wanted the clubs to keep all the gate money and Negotiate their own tv money.

Interesting article - just a quick point on stadium sponsorship in the States. Your comparisons are with new build stadia (and are based on maximum sums being paid). Renaming rights are far lower. $4m a year over 5 - 10 years being typical. $6m should the stadium host a superbowl. So placing the City deal in that context actually makes for some headscratching. Their argument no doubt will be it is the first time the stadium has been sponsored so it is comparable. I think that's missing the point.

The regeneration of the Openshaw area of Manchester will be one good thing to, hopefully, come out of this. And that's to the credit of City's owners whether or not it's a way to get around the FFP rules.

This deal makes me so mad. Not because of anything City did, but because it illustrates that Arsenal's run by a bunch of chumps. They whored themselves out for pennies on a dollar, built a stadium too small, and failed to write in any out-clauses or escalators. Hopefully by the time they get a chance to look for new sponsors they haven't become too irrelevant.

While you can maybe make the argument with a straight face that their lower profile makes a higher deal more noteworthy, the whole thing about the sponsorship of the campus being legal sounds very dubious. Them being able to build that campus without it counting against ffp is fair enough and so is profiting from it afterwards, but to claim that it was something that merited a naming rights deal goes well beyond what is actually reasonable and you would hope that UEFA see sense and exclude that part of the money from any calculations.

At the end of the day, the proof of the pudding will be in the eating, so these figures will not appear in front of UEFA for scrutiny for another 12 months at the earliest.

Till then it is all speculation and what figure is submitted for UEFA to judge as "fair value" may not be close to the figures be quoted.

And despite this deal, Manchester City still have greater challenges. Even if they earn £40 million per year from this Etihad, it may not even cover the salaries of Adebayor, Santa Cruz, Bellamy, Jo, Wayne Bridge, Wright-Phillips, Kolarov and Kolo Toure (none of whom are first choice).

thnx4this post. Never thought that this deal would be out of FFP rules. Just matching top clubs commercial income. 40 Mio per season for Shirt, Naming Rights & Campus wouldn't be that much out of line. But i think it won't be enough to get close to Real, Barca, ManU or Bayern. Despite the deal they can spend way more money. If you want a real fair competition you have to create a hard salary cap like in US-Sports. FFP is keeping the big clubs big. Championsleague revenues, which are way to high compared to Euroleague, contribute to the division of European football.

I'll take >100 mio. to make the difference. So this sponsorship deal doesn't hurt as much as the player investments made by arabian sheiks and russish oligarchs which were made and bringing the clubs to the CL in the 1st place. That's why FFP will help keeping new clubs like today's Malaga or Anzhi off the map, but it'll never secure a fair competition cause revenues already are too different to close the gap in years. FFP will help but unfortunatly there're too big exceptions for the next years...

Excellent article! We need more owners like sheik Mansour, Abramovic, Walker, and less like the Glazers! Why should those that put money into our game get penalized, and those that take money out walk away scott free? It is absolute nonsense that one club is allowed to pay £70m in interest payments, pay millions in consultancy fees to family members, and another that has no debt placed on it and have money invested by owners get audited by uefa.

great article again and again, now I see by your side least 2 times a week to see if you are finished with a new one. Sá now I have created a fan page about the swiss rample :-) With links to your page, Sá háper that you see on the page, it is called The swiss rample :-)

Excellent as always! I remember in the 90s that Stoke got 1 million pounds for a 10-year deal with Britannia for the naming rights of its new stadium. Great value for the sponsor! As it is still called Britannia, they probably had another deal (more like a million a year!)Despite all the better financial deals around English football, ticket prices for the fans remain expensive and are increasing every year. How long can that go on for? Arsenal had the fist 100+ pound non executive ticket last year...One day will come when fans will say no, surely? And what will happen then? It's not much fun watching football in a ground with empty seats. Money seems to be growing on tress for these guys. Cannot last forever...

By the way, "Etihad" translates into "United". Not bad for a City sponsor!

"That might seem reasonable for a club with Bayern’s tremendous record, but the value of deals at other German clubs is more debatable, particularly Schalke’s money-spinning deal with Gazprom"

Germany is - by far - Gazprom`s most important market. They don`t sell gas to GB, Spain or Italy. Hence supporting the 2nd most popular in Germany with a money-spinning sponsorship deal makes economic sense. For Gazprom Germany is the only market outside Russia that matters.

Intra-family money laundering masquerading as a legitimate business deal. But don't expect anything out of UEFA/FIFA, other than shaking their heads in admiration and saying: "Why didn't Jack Warner think of that?"

"nobody complained about Liverpool increasing their sponsorship deal by £12.5 million a season when they replaced Carlsberg with Standard Chartered last season" - I'm not a Liverpool fan, but was it Liverpool's chairman's brother who was signing the cheque for them from Standard Chartered? Some interesting points, but the subject here is related party transactions so lets not compare apples and oranges. If this sponsorship was from a completely autonomous company there could be no complaints either, but then if it was an arms length sponsorship it wouldn't be £400 million either as everyone in the world knows. Which is why I suspect UEFA will want to be seen to be taking these sort of challenges seriously.

This deal will serve as a wake-up call to those in UEFA who are convinced that FFP is the cure to football's current excesses.

As Tottenham Boy said, why is not debt, rather than inflation, being seen as the real evil here? Whatever the number being put up by Etihad, the truth is that this money is coming from outside football and going (partly) into the game. Across town, the leveraged buyout is pouring United's massive turnover into the hands of American banks, with a tidy sum being skimmed off by the debt-laden owners.

Football's financial expansion has traditionally been fuelled by sudden, large increases in revenue streams: the Premier League's corralling of gate revenues for the home team, BSkyB's huge TV rights deal, FIFA's massive sponsorship and TV rights increases from one WC to the next.

Is UEFA now putting itself in the place of approving every major commercial deal in European club football? By undertaking some kind of benchmarking, they are exposing the dirty secret at the heart of FFP - the smaller clubs, by whatever means, must not be allowed to catch up financially to the established big clubs and break into the privileged circle of steady UEFA Champions League income, which is the primary source of 'financial doping', a self-perpetuating advantage over non-CL clubs.

Yes, this is (almost certainly) a related party transaction, but the point is that if UEFA do indeed decide that is the case, then they have stated that they will look at benchmarks to assess the fair value of the deal. These would surely include the latest and greatest sponsorship deals. especially those that have significantly increased, such as Liverpool's.

So basically, abandon any hopes of competing for trophies unless you have a lunatic willing to spend a billion quid. FFP definitely working then!

Football has turned pony these days. Mid table teams like City & Chelsea who have never done anything in their entire respective histories are suddenly going to be the teams to beat. Even Man United will slip behind them in the next few seasons.

City & Chelsea vastly inflate transfers & wages so others cant compete, hide behind creative accounting and prevent anyone competing with them. Their also allowed to destabilize other teams by tapping up their best players, offering them triple their wages to leave.

never done anything in there repsctive histories wrong transfer fees wages etc what city are doing is no diffrent to chelsea blackburn arsnal united liverpool etc vefore them just diffrent scale and late and some infaltion if your complian is about modern football your post is 20 years to late and aimed at the wrong club furthemore what city have done to the transfer market isnt that bad i could explain it with some economics o you but it would take some time and you wounldnt believe me then there the good things city do which are overlooked which again i could explain but it wouldnt change how you think

The Etihad sponsorship deal with Manchester City has been met with hysteria from certain quarters and yet the deal is rumoured to be only the first of 5 stages planned for the project development. The City owners are in it for the long haul and wont go away.

The game is changing. The squealing is coming from the European football hegemony that is under threat and not from the average fan at the majority of clubs outside the rich elite for whom competitions and FFP rules were intended to benefit. The rich have just got richer in a self perpetuating cycle. Should a club be penalised if it comes along with a new, innovative financial model that puts back in to the community rather than sucks dry it till the pips sqeak?

To put City under scrutiny will open a whole can of worms as identified in the article. Clubs protest so much because know they will lose their priviledge. They will face lean times competing for future honours. Yet they will be able to reminisce in their "history" and the deluded view that they "earned it" as they are overtaken by usurpers.

It is all reminiscent of old distinctions applied to "amateurs" vs "professionals" as snobbery in sport. Those prejudices have gone in football and change will happen. Other Clubs will follow City's model. Same as it ever was.

Quote:- Mid table teams like City and Chelsea who have never done anything in their respective histories'............. ???????? ......

Only four different winners of the Premiership in 19 years, Man u, Blackburn, Chelsea and Arsenal.

Take the Jack Walker and Abramovic equation out and you are left with only TWO!

City's spectacular arrival at the fat cats table has brought more balance to the top end of the league, more competitive, more interesting.

The Champions League qualifiers from England during the Premiership years has been the usual four suspects with the exception of one incursion each by Spurs, City and Everyone. That's been just as predictable and stale.

good piece. the idea of uefa retrospectively applying benchmarks is rather odd. i suspect that clubs will have been guided on a structure of some sort. can it be deduced, then, that city's financial strategy might include many of the benchmarks against which others will be measured in respect of 'fair value'?

A quick question with regards to FFP... If a club decide to create an investment fund owned solely by the club and any profits generated from this fund is used by the club for the purpose of paying wages/transfers etc... is this allowed? if yes... what stopping major clubs from going this route to bypass FFP since this would be income generated within the club and not a gift bequeathed by some sugar daddy?

awesome article dudeagree with tottenham boy's comments too, adding that any change or challange to footballs major teams and PL top four is surely welcomed, and spending cash is going to be the only way to challange this elite!

Excellent piece - tried working through the fair play rules (my word, they're convoluted - and i'm a CTA, i should be used to it) and precedent deals to get to a 'fair' valuation figure (i got to £300m) but didn't have anything like the level of detail shown above. Great work.

To the person asking about VAT / tax above - if the fee agreed is (say) £40m plus VAT then yes, VAT would be payable in addition, but that wouldn't actually affect the net result of the money passing between the clubs, as this would be paid to the authorities by the selling club, and recovered by the buying club as input VAT.

Where a transfer is 'cross-border' there might be added complexity, but this would probably just be the 'reverse charge' (buying club puts the VAT on the return as an in and out - net effect nil).

The thing that can affect value is the payment of wages being 'after tax', as if the club takes on responsibility for also covering the tax bill, that adds another 66% on top of the wages agreed (s'line, 40% rate...)

Absolutely fantastic article. I know that it wasn't in support of your argument (which I completely agree with after reading your points), but I loved Henry's comment: "What was the losing bid?" Again, superb stuff.

you've pointed out the exact prejudice that ppl have against city. And they look at this deal in that light. You obviously corrected their error with your knowledge and insight. I am impressed how much impact this deal will have. It will work as a kind of eye opener for other English football clubs. Mancity is both rich and smart.

Superb, the best footie blog I read by a country mile (why is it longer? Not so great and clever now) also in the naming no names comment about inflated transfers, obviously author won't say but can a reader please as missed the elbow pointing.

Nice to see a balanced view - funny how the sponsorship deal has risen from what was reported by the local Manchester Pressi.e.£150M over 10 years with £20M to the council, as they actually own the stadium, to £400M by the time the big four lovin red top journals started squealing foul on behalf of their mentors.

I like the comment from Liverpools Yank 'what was the losing bid' along with his assertion that the naming rights of a stadium should not be more than 10 times the value of your best player!!!!!!

Well as Tevez is currently valued at £50M that makes this figure £500M - we've been sold short!!!!!!So not only does this yank invent rules for ENGLISH football but maths is not his strongpoint either.

If I was a Liverpool Fan I would be worried - sounds like he's as bright as Ronald Regan and went to the same school of economics as the Glazers - LOL

All these commenting City fans think that this article is wonderful because they agree with it. If this article didn't favour Manchester City they would hate you. What I'm saying is that they love the article only because it favours City and not because it is a well written ( or not ) piece.

The truth is, and you can't get away from it, is that they are trying to get round the rules because there is no way that City generate enough revenue to sustain the spending. I doubt whether United or Real madrid generate that kind of revenue. They are simply trying to buy their way to success very very quickly. That's upto them but the winning will mean nothing. The same argument has been labelled at United but there is a massive difference, United do it from their own generated revenue.

actually, city fans (and everyone else) agree with the article because its factual, well-written, and isn't filled with typical-fan-emotive-responses such as "city are trying to buy the league". If, after reading the article all you can reply with is

"The truth is, and you can't get away from it, is that they are trying to get round the rules because there is no way that City generate enough revenue to sustain the spending"

then you clearly lack the ability to articulate your reply properly or even understand the issue at hand

Catching up with your latest pots. After the news, I am glad you looked at the City deal in a separate article. As usual great stuff.

Although I accept the numbers would stack up, I still think this deal would not have happen if 1- Etihad had not been related to ManCity or 2- raising capital had been an issue for the owners of Etihad &/or City. So, yes it's not that different from other past dodgy deals in Spain or Germany (and it's much better than the United LBO extortion) but it remains really borderline competitive ... (I liked Henry's comment on the losing bid).

As for Arsenal's more and more embarrassing commercial short-comings (price hikes, low commercial revenues), your recent articles clearly show that a revenues arms race is in full swing here and Arsenal is seriously falling behind. Either Ivan and his team deliver faster growth quickly or we will end up a second-tier European club like our north-London neighbours...

As for those complaining that the FFP rules are creating a de-facto European elite, get real and check out this page:

http://en.wikipedia.org/wiki/G-14.

"G-14 members had won the European Cup/Champions League 41 times out of 51 seasons."

"There have been only three Champions League or European Cup finals where both teams were non-members of G-14 (1970, 1979 and 1980)"

All of which is to say that if UEFA are going to allow sponsorship of this somewhat amorphous investment as an allowable income to offset player costs, they ned to be much clearer that the investment is being made to the tune which it is, and that it is a genuine community-facing investment.

The former requires a degree of scrutiny and compliance which the current assessment doesn't seem to provide (and wouldn't have been agreed by the club had UEFA proposed it) and so like a local planning authority who extracts promises from developers which get broken, it's too late to do anything after the fact as the damage is done.

Secondly, if community investment is to be used as a catch-all, then UEFA need to start building metrics into the assessment to evaluate the actual impact on the community, not the club's self-declared intended impact (again, called for in the SD research).

One thought about FFP: how will italian teams, first and foremost Internazionale, cope with these regulations? Inter with big losses, but structure in Italy (bad stadiums top clubs, except Juve soon, not own themselves, hooliganism etc.) means less income than top clubs in other leagues.

It would be interesting to see an analysis on how Inter would cope with Financial Fair Play, or italian teams in general for that sake?

Interesting article Swiss. All that is missing is to show how anti-competitive these FFR's might well be viewed as. We have an EU that insists on competition for everything, whereby trains, hospitals and most other things you can name have to be competitive, we have stock markets and commodity markets which are about as deregulated as you can get, affecting millions of people, on the whims of a few people and all we can get worked up about is whether the 'G14' clubs will be able to dominate football for the foreseeable future. Just a couple of points to close.1. Mr Henry and his 10x best player argument. Just a small flaw. Who decides what this valuation is? Given the sums spent by his club on unproven players Mr Gerrard must be worth £100M!!2. What is the correct financial value of a ticket? Arsenal are charging a grotesque amount of cash to watch a selling club not win anything and yet this is the model to which we should all aspire. (if only we all had expensive real estate to sell as a start!).3. For all man u's history they won the top division twice until 1952, 41 years after the second one. Prior to the premier league they averaged a league title every 11 years.Liverpool are very much the same. One title every 11 years until a run of 11 in 14 years.The no history argument is a spurious one where people confuse history with recent success. Interestingly both the blue teams in the NW major cities were formed well before their illustrious red counterparts ( indeed Everton have played more 'top flight' games than any other club. If only history was measured in time!

There's one aspect of all this that I feel has been shamefully neglected by the media:

It's utterly immoral what Man City are doing.

The money they're spending on ridiculous fees and wages for football players rightly belongs to the people of The UAE.

I hope Man City fans feel comfortable knowing that Yaya Toure's £250k-per-week is effectively coming straight out of the pockets of the people of The UAE, many of whom still live in shanty towns, suffering the most desperate poverty.

Can you imagine the uproar there'd be if The Queen of England started spending hundreds of millions of taxpayer's money on football in Asia?

"If the net is cast a little wider, Bayern Munich’s sponsorship deal with Deutsche Telekom is worth around £23 million, though performance bonuses could take that above £25 million. That might seem reasonable for a club with Bayern’s tremendous record, but the value of deals at other German clubs is more debatable, particularly Schalke’s money-spinning deal with Gazprom."

Its late and I haven't yet been able to digest the entire article, which appears to be well-researched and fair-minded but I've just selected this as an example.

If one of the principles of Fair Play is that clubs with a history of achievement in Europe are permitted to obtain higher sponsorship income than clubs looking to break that 'cosy cartel' then that is clearly an unfair principle.

This surplus of sponsorship income 'entitlement' gives those clubs, such as Bayern, an advantage to help pay higher wages, and thus attract a better quality of player, and helps to maintain a playing advantage over those clubs, like Man City, wishing to smash that protective barrier.(all other things being equal, of course)

Monopolies and cartels can only be broken by new entrants to a market incurring large losses over a short-to medium period of time in anticipation of generating sufficient income to ultimately gain in the medium to long term.

Its irrelevant how the likes of Bayern, Man U, the two Spanish giants, and the top Italian clubs, have accumulated their various sources of revenue, by UEFA restricting the capacity of new entrants to challenge the 'cartel', they are effectively helping to perpetuate it.

What City did is pushing the boundaries. From the article it seems that's there's no fault. But then again it only shows how a sugar daddy can buy success. Find a billionaire that would buy a football clubs as his toy, get his family member to support it with exuberant amount of sponsorship beyond the value of the club and mess with the whole spirit of fair play. It's as as usual great article - but it doesn't cover up the fact that City buy success. Nothing wrong with that, but for people who love class - it's just plain despicable.

so investing in the stadium in the youth training facilites in the first team in charities in the local commnunity and respecting the fans wishes and making the club more successful and sustainable is disrespectful ok how very very strange

the stuff he uses to reach these figures is based on what city have done in the past and what they say they will do so i would say it reflects who they have in the money department so they will be broadly identicle so i think that proves that they know what there doing and look at what they have done with there other companies and the cvs of those people or the people at city now and you will find they know what they are doing stop being silly

I think there is a little of the cart being before the horse in the spirit of this deal i.e. if you are prescient enough to sponsor a team based on their future success then should you not pay a more reasonable amount for what is essentially a gamble?

Praise for The Swiss Ramble

"Blogger of the Year 2013 - It’s testament to the effect that Kieron has had on the blogosphere that so many fans take his word as gospel. Putting to use his career in the world of finance, his insights into balance sheets and simple explanations of complex ideas appeal to the hardcore financial whizz and casual fan alike." - The Football Supporters' Federation